Merkel, Xi agree to work on steel overcapacity within G-20

BERLIN — German Chancellor Angela Merkel and Chinese President Xi Jinping discussed overcapacity in world steel markets and agreed on Saturday to work on solutions within the framework of the Group of 20 (G-20) group of industrialised nations, Merkel's spokesman said.

In a telephone discussion, the two newly re-elected leaders emphasised close ties between the two countries, both facing planned US steel and aluminum tariffs, and agreed to deepen their strategic partnership, Steffen Seibert said in a statement.

They also underscored the importance of multilateral cooperation on global trade, a pointed response to an accelerating shift away from multilateral action and institutions by the United States under President Donald Trump.

US officials have said they will seek to work with "like-minded" countries at the G-20 finance leaders meeting early next week in Argentina, to push back against China's state subsidies and investment policies.

The Merkel-Xi call came amid tensions between the United States, Europe and China over US tariffs.

Merkel and Xi "discussed the problem of global overcapacities in the steel market and backed continued efforts to work toward solutions in the framework of the G-20 Global Forum [on Steel Excess Capacity]", Seibert said, referring to a body initiated at the G-20 summit in Hangzhou, China in 2016. 

"In this regard, they emphasised the importance of close multilateral cooperation on trade," he said.

Trump has criticised both Germany and China for their trade surpluses with the United States since taking office in 2017.

Merkel on Saturday said Germany's trade surpluses were narrowing due to rising domestic demand, and the government would continue to try to support that trend.

German Economy Minister Peter Altmaier will visit Washington this week to press for an exemption from US steel and aluminum tariffs as part of a broad push by the European Union to reverse the US steps.

German Finance Minister Olaf Scholz will discuss the issue at a G-20 meeting in Argentina with US Treasury Secretary Steven Mnuchin.

Merkel said on Friday the planned US tariffs violated the principles of the World Trade Organisation and the dispute should be resolved via talks if possible.

Seibert said Merkel invited the Chinese government to visit Berlin for official government consultations, and Xi also extended an invitation for Merkel to visit China.